All Forum Posts by: Prady T.

Greatly looking forward to this. Mind pointing us where the group will be located or having some signs/other signifiers for where the group is for those coming in a bit later? Can be hard to find the group during a busy time, especially for first time attendees. 

Best,
Prady

The beauty of the Massachusetts market is that it offers a variety of different ways to do well in real estate and you're not stuck with one direction. Once you've acquired a multi-family in an area, like say a Revere - the steady gentrification offers opportunity for higher rentals and steady cash flow, but also for very lucrative exits due to appreciation as a multfiamily, or additionally, the high possibility of condo conversions and phenomenal sellouts. 

My recommendation from having  invested in Boston for a few years now is to purchase properties that provide you a diverse set of exit options. For example, when purchasing a multifamily, I always make sure that the layouts of the units allow for possible condo conversions down the line, that the area is close to the MBTA (or commuter rail), that the property is in an area that is going to see future gentrification, and that it is currently demanding less than market rents. If you do that, you are setting yourself for success. Either the property will cash flow, and/or it will sell as a multi for a few hundred thousand more than you acquired it, or you can convert it as a condo and "sell as needed" for extra firepower. 

I recently purchased property in Downtown Boston with the metrics of cash flow (cash on cash return, cap rates) being on the lower end - as is common in Boston. Instead of being in despair, I converted my multi into condos and was able to profit very handsomely. So in this case, the rental market did not pick up, but the condo market did and since I had made sure that my property could exit in both ways, I was covered.  

Each submarket around Boston has it's own "play;" and as a savy investor, don't box yourself - because in Massachusetts, you have the luxury where you don't have to. 

ps. As far as where I see the next bigger play, it is East Boston! 

Cheers!
Prady

As we are seeing the rents in Boston creeping up, the submarkets around the city are becoming increasingly viable options for buy and hold investment properties. I would focus your attention on East Boston, Revere, Everett, and Chelsea. Chelsea still has ways to go, but I predict it will be continue to gentrify in the next 5-10 years. 

What's key here is that the most significant tenant pool in these areas are working professionals/grad students who are being outpriced in Back Bay, Southie, South End, North End.  These tenants tend to be very good: clean, reliable, and professional. Because of the large amount of educational institutions and white-collar professions available in Boston, compounded with a mostly reliable MBTA system, you'll see these attractive tenants having no problem living in areas that will previous C-areas provided that their units are in good shape. (Think Seaport, and Southie)

Do note, that the properties you will likely come across in these areas will require major work; so I strongly believe that building a team that can provide rehab and other construction work will be a major asset. You're unlikely to come across 8%+ cap rate properties that are turnkey in these submarkets (with the exception of Worcester, but then you're dealing with a whole different tenant base.) 

I have invested in Boston for a long time, and as we are seeing the growth in the submarkets, including increasing gentrification, I have doubled down. My area of focus is East Boston. These investment will require some major work, but I have found them to be stellar cash-flowing investments - even better than some of my out-of-state investments, with the added benefit that my tenant base gives me little trouble. I have actually been able to handle the property management of these larger MFs internally, saving me more costs. 

Here's where some first-time investors can make mistakes - numbers paint just one picture. With many properties, you have to absolutely ensure that you're getting a manageable tenant base. If you're getting difficult tenants, then you can run into many, many problems and it's seriously not worth it the extra percentage on the cap rate you could get. 

Cheers,
PT

@Darlene Julien